A South Korean billionaire and tech entrepreneur was arrested on Tuesday over allegations of stock price manipulation involving a prominent K-pop agency during a deal last year.
Kim Beom-su, founder of the technology giant Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant for his custody, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim asserted during a recent staff meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment amid a takeover bid, allegedly involved in a scheme to thwart rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are leading players in South Korea’s K-Pop industry, representing popular groups such as Aespa and BTS.
Ultimately, Kakao succeeded in buying SM Entertainment. Additionally, Bae Jae-hyun, Kakao’s chief investment officer, was indicted last year on charges related to stock manipulation.
Kim founded Kakao in 2010, with its headquarters in Jeju City. He holds approximately a 24% stake in the company, which had over 10,000 employees in 2020. At one time, he was regarded as South Korea’s wealthiest individual, with an estimated net worth surpassing $13 billion.
In response to the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He emphasized that it will be the responsibility of those remaining at the company to demonstrate its capability to succeed in the founder’s absence.